Investment Climate in Sri Lanka Power Sector

Investment Requirements for Renewable Energy by 2050

The total requirement to support the growth of the power sector in Sri Lanka consists of numerous costs such as;

Capital costs required for Project development

Associated transmission infrastructure cost

Costs of associated ancillary systems

However the project development cost based on the estimated demand is ~70 Billion Units by 2050 and the estimated Capital Requirements for the project development would be US$35-US38 billion. The table below presents a cost breakdown of power generator systems based on the different technologies.

The estimated capital cost per kW may vary somewhat based on the actual energy mix in 2050.

You could also have a look at the total investment for Sri Lanka’s 2050 100% Renewable energy electricity generation scenario where the financial requirements of the total investment required by the Sri Lankan power sector to adopt 100% RE by 2050 will be in the range of US$54-US$56 billion.

Investment Climate in Potential Investors

While the need for 100% investments on Renewable Energy by the year 2050 have been analyzed, this requires to be accompanied by a strong investment climate. Foreign and domestic institutional investors in Sri Lanka have been facing significant barriers to invest in renewable energy sectors due to currency risk, lack of intermediaries and liquid instruments as well as low credit rating of operational assets, amongst others. Due to these reasons there is a requirement to study the current investment climate and address these barriers in a rational way.

Potential investors in Sri Lanka’s renewable energy and power sectors have been classified into four broad categories:

Government

The private sector

Financiers

Retail investors

These investor categories will play a critical role in bridging the gap between debt and equity enabling the country to meet investment targets required to increase the adoption of RE in the power sector.